Health care was one of the top issues on the minds of voters in Kentucky and Virginia last night and they voted in favor of Democrats who support a clean Medicaid expansion and against Medicaid work requirements – a signature issue for CMS Administrator Seema Verma.
Kentucky was an early adopter of the Affordable Care Act’s Medicaid expansion under Governor Steve Beshear (father of the likely Governor elect Andy Beshear) and an estimated 400,000 Kentuckians gained affordable coverage. Governor Matt Bevin ran on an anti-ACA platform, but when he got into office he realized he couldn’t get rid of the Medicaid expansion – which is covering an astonishingly large percent of adults in rural areas (40% to 50%).
So instead he received approval for one of the harshest Medicaid waivers in the country – and was aided in writing it by none other than Ms. Verma in her role as a consultant before she was appointed to be CMS Administrator. (Verma has said she recused herself from the waiver approval). Not only did the waiver impose new work reporting requirements, it contained numerous lockouts (forced period of uninsurance) as punishment for missing a premium payment or a paperwork deadline. The state’s own estimates projected that 95,000 Kentuckians would lose coverage.
Fortunately, the waiver has not been implemented due to federal court action ruling it unlawful. But that ruling has been appealed, and Governor Bevin vowed to take it all the way to the Supreme Court. He won’t have that chance now. The likely incoming Governor Andy Beshear announced on election night that he would withdraw from the waiver agreement during his first week in office.
It’s worth noting that Beshear will have no trouble doing so – Section 1115 terms and conditions always include options for states to terminate their waiver or modify it. These terms and conditions are not binding on states. It can get tricky in states where there is an existing state statute like Michigan, but that is not an issue in Kentucky.
Turning now to Virginia, where Medicaid expansion passed in 2018 after Governor Ralph Northam compromised with some key Republicans who controlled the legislature and added work reporting requirements to the mix. The state’s Section 1115 Medicaid waiver is still pending with federal CMS – and with the flip in control of the legislature there is no doubt that the Governor will think about pausing the request and considering his options.
These electoral victories come on top of two Republican states (Arizona and Administrator Verma’s home state of Indiana) announcing in the last few weeks that they will not implement their planned work reporting requirements. Both states cited pending litigation which has halted Kentucky, Arkansas, and New Hampshire from going forward.
I have been saying for some time that work requirements are a terrible idea. They don’t achieve the purported goal of supporting employment but, as we saw in Arkansas, they are very successful in kicking people off of their health insurance. 23% of those affected in Arkansas lost their coverage in short order. A state has to incur large administrative costs and lawyer’s fees. A recent report from the Government Accountability Office highlighted these administrative costs, and in a really interesting finding suggested that CMS may be inappropriately approving some of the federal funds going to this flawed endeavor. They don’t comport with the objectives of Medicaid – which is to provide health insurance – not to take it away. This has formed the basis of the judicial rulings rendering them illegal.
Add to the growing list of why states should not pursue this policy — voters don’t like them. Elected officials, take note.